Universal life insurance was developed in response to:

Universal life insurance was designed as a flexible premium adjustable life insurance product, addressing the limitations often associated with traditional whole life insurance policies. Specifically, it was created in response to the need for better returns on cash values due to low interest rates offered by whole life policies. Whole life insurance generally provides a fixed premium and guaranteed cash value accumulation, which can become less attractive when interest rates fall or do not keep up with inflation.

Universal life insurance addresses this by allowing policyholders to adjust their premium payments and offering a cash value that can earn interest at varying rates. This adaptability allows consumers to have greater control over their insurance costs and benefits, making it a more appealing option for those seeking potentially higher returns than those offered by traditional whole life policies.

The other options reflect considerations in the insurance market but do not accurately capture the primary motivation for the development of universal life insurance. High interest rates would not necessitate a product like universal life; instead, they would usually benefit whole life insurance. Increased death benefits do not specifically relate to the created flexibility of universal life, and while limited premium options characterize certain products, it is not the core reason behind the invention of universal life insurance.